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European PE-backed deals drop 15 per cent


The number of European private equity-backed deals declined during the summer holiday period, down 15.1 per cent to 309 transactions in Q3 2016 from the 364 transactions seen in the previous three months.

This is according to preliminary figures from the Q3 2016 Private Equity Barometer, published by unquote” in association with SL Capital Partners.
 
The combined deal value also decreased by 23.5 per cent.
 
The average deal value in the third quarter (EUR80 million) was 9.9 per cent lower than that of the second quarter (EUR88 million).
 
Overall the year to Q3 2016 witnessed total deal value decrease by 21.2 per cent, while total volume slipped by 22.4 per cent. As a result, average deal value increased marginally by 1.6 per cent.
 
The aggregate value of buyouts in the year to Q3 2016 (EUR99.2 billion) was down 20.9 per cent on the previous 12 months, while the number of deals (590) represented a nominal 0.2 per cent rise. Aggregated value also decreased, down 26.1 per cent to EUR21.7 billion from the previous quarter’s total of EUR29.4 billion.
 
The core mid-market segment (EUR100 million to EUR1 billion) increased by 13 per cent, from 46 to 52 deals. The value increased by 20.4 per cent from EUR13 billion to EUR15.6 billion.
 
A slowdown of deal flow in the small-cap (sub-EUR100 million) and large-cap (EUR1 billion+) ranges was responsible for the decrease in the total number of buyouts in the third quarter.
 
France and the rest of Europe categories were the only regions to record a rise in deal numbers in Q3 – up 6.9 per cent in France (from 29 to 31 deals) and by 27.3 per cent in the rest of Europe (from 22 to 28 deals).
 
Peter McKellar (pictured), head of SL Capital, says: "While Europe experienced its normal slowdown in private equity activity during summer 2016, it is clear that recent market volatility in the UK and continental Europe reduced the appetite for new investments. The large buyout segment again highlighted that it is a key swing factor quarter-on-quarter in value terms, however, we are encouraged that core mid-market private equity deals, the mainstay of the European market, delivered an increase in both volume and value during the period. We note with interest that the French private equity market rivals the UK as the most significant market in Europe over the past 12 months.”

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